Span Developers Vs DCIT (ITAT Mumbai)
Summary: The Mumbai Income Tax Appellate Tribunal considered appeals concerning AYs 2012-13 to 2014-15 arising from search proceedings under Section 153A/Section 153C. A search under Section 132 was conducted on the assessee group on 12.01.2021 and notices under Section 153A/153C dated 12.02.2022 were issued for assessment years falling beyond six years from the assessment year relevant to the previous year in which the search was conducted. In the lead case, the Assessing Officer made an addition of Rs. 15,99,340/- by estimating 15% of alleged ‘on money’ of Rs. 1,06,62,267/- based on certain notings in seized material. The assessee raised an additional legal ground contending that the extended period under the fourth proviso to Section 153A(1) could not apply because the escaped income was not represented in the form of an “asset” contemplated by Explanation 2. The Tribunal admitted the additional ground as purely legal in nature. Referring to Viraj Profiles Limited Vs DCIT, Smart Chip (P.) Ltd. Vs ACIT and other coordinate Bench decisions, the Tribunal held that the extended period requires the statutory conditions concerning escaped income represented in the form of an asset to be satisfied. Explanation 2 to the fourth proviso includes immovable property, shares and securities, loans and advances and deposits in bank accounts. The Tribunal found that the Assessing Officer had nowhere established that the alleged income from ‘on money’ was represented by an asset of the specified nature. It therefore held that the reopening beyond six years was invalid and the consequential assessment orders were void-ab initio. The additional ground was allowed, the assessment order for AY 2012-13 was quashed, and the other grounds became academic. Appeals for AYs 2013-14 and 2014-15 were also allowed on the same basis. The appeals concerning Span Realtors and Span Construction were likewise allowed following the same reasoning and the principle of consistency. The order was pronounced on 24.08.2026 under Rule 34 of the Income Tax (Appellate Tribunal) Rules, 1963.
